Price of Mineral Fertilizers Rise Temporarily: Kommersant

BUSINESS TURKMENISTAN
Price of Mineral Fertilizers Rise Temporarily: Kommersant
The FOB Black Sea price of ammonia reached $450 per ton in June.

The cost of mineral fertilizers is surging due to high demand and local shortages in a number of countries. The good market conditions made a number of companies in Russia and abroad cautiously think about expanding their capacities. Experts explain the restraint of the companies’ plans by the expectation of a correction in the fertilizer market in the next few months, according to article posted on the Moscow-based Kommersant newspaper on Friday.

Prices for ammonia, urea, ammonium nitrate, NPK, monoammonium phosphate (MAF) and diammonium phosphate (DAP) in June reached their maximum values over the past few years. The cost of ammonia has increased the most since the beginning of the year, with its FOB Black Sea price reaching $450 per ton in June. NPK fertilizer price exceeded $300 per ton. The price of urea in late May - early June jumped 15%, to $368 per tonne (FOB Black Sea), MAP - reached a record $ 670 per tonne (FOB Baltic Sea) in the second week of June.

Dmitry Akishin from Vygon Consulting said that a surge in prices up to 1.5 times to the average pre-COVID levels is observed not only in the fertilizer segment, but also in many raw materials industries - petrochemistry, metallurgy and woodworking, and is somehow connected with a supply chain disruption with growing demand. Since the start of the pandemic, freight rates have almost doubled, he noted.

The Gazprombank’s Center for Economic Forecasting indicates that, in addition to dollar inflation, the rise in the price of mineral fertilizers was facilitated by rising costs with an increase in gas prices, an increase in demand amid a rally in prices for crops, as well as the consequences of a deficit that arose due to the shutdown of chemical plants in Texas in February 2021.

According to Nina Adamova from Gazprombank's Center for Economic Forecasting, the market may be balanced in the next six months, but fertilizer prices will remain above the levels of end of 2019 - early 2020.

Dmitry Akishin also believes the market will see corrections. In his opinion, supply chains in the chemical sector may improve in the next few months, which will return prices to standard levels. Therefore, the expert believes, it is too risky to rely on their current high level for making investment decisions.